Social Security Reserves Down to Six Years

Actuaries estimate full benefits can only be paid thru Q3 2032

The 2026 Trustees Report held few surprises

The actuaries at Social Security are charged with analyzing, reviewing, assessing, estimating, and projecting the future health of Social Security. The report is updated and published annually. This year’s report was released on June 9^th. You can read the summary for highlights.

Many argue that Social Security is the single most important program in our federal government. More than half of today’s retirees rely on Social Security as their only source of income. So, this report is held in high regard.

If Congress continues to do nothing to fix the law, all Social Security recipients will see their monthly benefits cut. Their payments will be about 22% lower, creating a catastrophic problem for most current and near retirees.

OASI is the Old-Age and Survivors Insurance fund. That’s the “checking account” where retirement benefits are paid. The Social Security reserve account is similar to a “savings account.” Surplus inflows from earlier decades have been saved up for a rainy day. When most of the Baby Boomers will be drawing benefits. The rainy day is here.

Why the Social Security reserves date inched up

In the grand scheme of forecasts and projections, this is roughly the same outlook as last year.

And it’s somewhat more hopeful than Josh Lyman’s prediction in the West Wing episode. Back in 2000, the forecast was that Social Security reserves would be used up by 2017. At least now we shouldn’t run out until 2032.

The goal of the actuarial team at the Social Security Administration (SSA) is to analyze factors that affect incoming payroll dollars. They examine major economic factors that might increase or decrease incoming payroll dollars. And they look at a 75-year time horizon to assess the program’s stability.

Three key factors accelerated the reserve account’s depletion:

1. A lower fertility rate.

The US is experiencing a steep decline in the birth rate. There are different points of view on whether this is a temporary situation or not. This year’s report lowered the birth rate from 1.9 to 1.75 babies per woman. That is a dramatic drop in population, from a previous population projection of 450 million down to 410 million.

Other federal think tanks believe the projection is not steep enough. The bottom line is that fewer babies mean fewer future workers and less revenue to support retirees.

2. Reduction in immigration.

It’s no surprise that our immigration policies are being tightened aggressively. The effect on Social Security is twofold. First, there’s a short-term effect. We’ve lost many workers who paid into the system. Those working here illegally pay into Social Security but never receive any benefit payments in their old age. Second, the long-term outlook for immigration inflows has been reduced.

Personally, I thought the Social Security reserves would be depleted in 2031, given the aggressive reduction in immigration and a lower birth rate. I was somewhat surprised that the date was 2032.

3. HR. 1, the tax and spending bill from July 2024, took effect.

The latest tax law locked in the 2017 tax rate cuts for the foreseeable future. As a result, anyone whose Social Security benefits will be taxed will pay a lower rate. There is also a temporary 4-year additional tax deduction for anyone over age 65. Plus, the standard deduction was increased for seniors going forward. Both deductions reduce the amount of income subject to taxation and move more seniors into lower brackets. Fewer seniors will pay taxes on their Social Security benefits. And that specific tax stream goes directly into the Social Security reserves.

A few positive projections offset the dramatic impact of population decline

Also noted in the report were a couple of positive factors that countered the negative ones. One assumption concerned overall productivity. The 2026 Trustees Report reflected higher productivity than in 2025. More workers receiving higher wages direct more FICA dollars into Social Security.

The second factor, while it improves the outlook, I found somewhat concerning. The overall mortality rate ticked up slightly. That means the actuaries expect more older folks to die several months earlier than in last year’s report.

Longevity can vary significantly across population groups. Wealthier folks tend to be healthier and live longer. But there are more not-so-wealthy people and people of color who tend to die earlier. Those who die earlier, to be blunt, receive fewer payments over their shortened lifetimes.

The result here is that even small shifts in these factors can offset some of the more dramatic declines in fertility and immigration.

So, yes, the 2026 report shows the Social Security reserves will be fully used to pay retirees a few months earlier than last year. But the fact of the matter is, there isn’t much road left in front of us any longer.

Congress hasn’t taken charge of the situation. And more Boomers and GenXers are increasingly concerned about receiving 100% of their earned benefits.

I sound like a broken record

Media coverage of our current Social Security underfunding has quieted a bit over the past year. Everyone seems more resigned to the fact that only Congress can fix this thing. And frankly, I think we’re all exhausted from trying to get Congress to do the right thing here. They’ve already blown the 30-year advance warning. And now we’re all going to take a hit in some way.

As I said last year, Congress is simply in no hurry. Heck, they think, we still have 6 years of runway and 3 major elections before it’s really a crisis! That we’ve known since 1999 that the Social Security reserves would run out just wasn’t important enough to fix.

It’s the same-old, same-old approach to how Congress deals with most situations. A problem has to be blowing their doors off before they collectively expend any political capital to fix it. We should expect nothing different this time around.

Every darn year since 2000, when the “Bartlet administration” was at the helm, Congress has known this day was coming. Yet they chose to do nothing. And now that day is just around the corner. Oy.

What can be done, if anything?

I’m trying to stay highly engaged in the drama unfolding around the Social Security reserves. So let me share what I think we can each do to keep pushing this boulder up the mountain.

First and foremost, we cannot let our guard down. Too many older Americans are counting on us younger folks to protect Social Security. And we all need to be confident that the program will support us in our retirement years.

Second, do not claim early unless you’ve done the math. Consider how claiming too soon will affect your overall retirement income plan. If you claim early, you’ll likely deplete your personal savings sooner than planned. You will not be grandfathered into higher payments. If Social Security’s reserves run dry, your benefits will be cut by about 22%. Full stop.

Third, start calling your representatives weekly. Pick up your phone and call each member of Congress. You only have three of them. You’ll rarely reach anyone, so just leave a message. You only get 90 seconds on the recording. If you’ve never called your representatives before, you might find Getting Started with 5Calls a good place to start.

And last, understand that Social Security cannot go bankrupt. But you’ll need to get involved to be part of the solution. There are many very good ideas for addressing the immediate solvency problem and the program’s long-term security. But all roads lead to and through Congress.